Vodafone (VOD) has driven the FTSE 100 to a new record high, as investors flocked to the telecommunications giant following a rise to the dividend.
Shares in the group jumped 4.1% to 219.8p after it stuck to plans to hike the final dividend to 10.03 euro cents, taking the full-year payment to 14.77 euro cents, or 12.7p, equating to a yield of 5.8%.
That helped the FTSE 100 rise 41 points, or 0.6%, to a new all-time high of 7,495.
Investors focused on Vodafone's forecasts of stronger free cash flow and earnings growth, which helped to offset a €6.1 (£5.2) billion loss for the year, triggered by a €5 billion writedown in its India business.
Ken Odeluga, market analyst at City Index, said the share price reaction was a sign of investor relief. 'The €6.1 billion loss whilst eye-watering had been flagged, following the group's expectation of a large tax impairment related to India,' he said.
'There had been concerns that downgraded earnings guidance in February might presage a chill in shareholder payouts, a further means of preserving cash after the sudden upsurge of price competition in India.'
But Russ Mould, investment director at AJ Bell, said even with the jump in free cashflow, from €1.2 billion to €4.1 billion, and the outlook for a rise to €5 billion this year, Vodafone could struggle to fund further dividend rises.
'The [cashflow] increase will be supported as much by falling capital investment, upon completion of the Project Spring service improvements initiative in the UK, as it will rising profits but even so, free cash flow of €5 billion compares to the annual dividend bill of around €4 billion,' he said.
'Free cash flow cover of 1.2 times is less than ideal. In addition earnings cover for last year's dividend was barely 0.6 times even on an underlying basis, so there is relatively little room for any sudden profit shock in the event of, say, a major price war in a key market.'
EasyJet (EZJ) meanwhile slumped to the bottom of the index, down 4.7% at £12.48, after the budget airliner posted a bigger-than-expected £212 million loss for the first half of its financial year, ahead of a £21 million loss for the same period a year ago.
'Weaker sterling and a late Easter have hit EasyJet's bottom line, as increased costs have more than offset higher revenues,' said Laith Khalaf, senior analyst at Hargreaves Lansdown. 'While the airline is flying more passengers, it's making less money from each seat on its aircraft.'
Hargreaves Lansdown (HRGV) joined it at the bottom of the index, slumping 4.4% to £13.84 on news of US tracker fund giant Vanguard's plans to launch a direct to consumer platform in the UK.